Mordred

also have this for no reason

so from what i see

the demonic goop seems to be an organism that is attracted to negative emotions (such as hopelessness, hatred and sadness) since it consumed peach when she was feeling hopeless that nobody came to save her, essentially corrupting her to a point where she's consumed by her hatred as shown in saving peach episode

it manifested from the eldritch keyboard that mr puzzles presumably created and gave to smg4. it doesn't seem like it can be controlled by mr puzzles with how it moves on its own and stayed underground for years. it was still in the smg4 world after mr puzzles departed in wotfi 2025, meaning it may be connected to mr puzzles but doesn't directly come from him. rather it came from something else that mr puzzles took advantage of to make the keyboard. its implied by smg4 characters as i recall that it didnt have any "meme energy" its something entirely different, something that doesnt belong in smg4 universe

but it can also affect mr puzzles himself. as in, to corrupt him/or make him consumed by hatred just as it did peach. because of these two facts

how it showed up in puzzlepark arc

it being attracted to negative emotions

it showed up after meggy was brought back by mario and mr puzzles, having lost his only friend, was upset before he became outraged. then just right after that, demonic goop started taking over the entire puzzle park. if i had to guess, hes blinded by his rage/hatred for smg4 crew and as a result of that, this happened

by end of it meggy snapped him back to reality by meeting with kid puzzles as leggy and befriending him. then everything was back to normal with mr puzzles being his cheerful self again talking about how he just learned important life lesson (before getting sent to the asylum) which is similar to what happened with peach in saving peach video

id say eldritch power/demonic goop is basically a drawback/consequence of brainwashing ability and other abilities that mr puzzles that is part of him